Covid-19: Economy Debate

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Department: HM Treasury

Covid-19: Economy

Baroness Morgan of Cotes Excerpts
Thursday 4th June 2020

(3 months, 4 weeks ago)

Lords Chamber
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HM Treasury
Baroness Whitaker (Lab) - Hansard

My Lords, I have three questions for the Minister about the measures we need to adopt. They go beyond the consequences of Covid-19 to use the opportunities it offers. First and most importantly, how will Her Majesty’s Government direct their economic advisers to address the climate emergency? How will they get to the position that all economic analysts model and forecast through the prism of mitigation of or adaptation to climate change? How can we bring in externalities from outside?

Secondly, how will economic analysis be framed to prioritise well-being? I follow the authors of The Spirit Level in asking economists to pay more attention to non-monetary elements of inequality, such as health, social problems and access to amenities, in the economy. They demonstrate that equality is conducive to a thriving economy. To those who say that some public goods cannot be priced and are outside the province of economics—literally invaluable—I point out that there have been ways of considering how we should compute values outside the cash economy at least since Mandeville’s The Fable of the Bees in 1723.

Thirdly, how will the Government ensure that citizens are party to economic environmental decisions? In this connection, will the Government now join the 88 nations which have ratified the Aarhus convention, which our former membership of the EU entitles us to do? We have experienced a high degree of public mistrust in political action. We need to repair this democratic deficit.

How should economic approaches adapt to the new world we shall find ourselves in so that we can use the opportunity to make it better?

Baroness Morgan of Cotes Portrait Baroness Morgan of Cotes (Con) - Hansard

My Lords, I have three points to raise. The first is about support for the cultural and creative industries, but that has already been very articulately outlined by noble Lords on all sides during this debate. I look forward to the Minister’s response on that matter. Of course we all want to restore our economy, but our cultural and creative sectors make our lives worth living. They are an important part of restoring our enjoyment in this country as much as of restoring the wider economy.

Secondly, as has already been outlined by noble Lords, a significant amount of debt will be owed by businesses and individuals. However, 9 million people in the UK were already estimated to be overindebted before this crisis started. I hope the Government will think very carefully about the ways in which they will recover debt. I draw noble Lords’ attention to the recent Centre for Social Justice report Collecting Dust, which advocates a debt management Bill. There have also been suggestions for ways in which government can collect its own debt, particularly local government collecting council tax. I think there will be campaigns to make sure that the letters sent to people who owe money under the Consumer Credit Act are reworded not to be overly ambitious in their enforcement.

My third point is on business rates and fiscal events. I praise the Government for their response in supporting jobs and SMEs in particular during this crisis, but the fact that one of the first things that had to be done was to suspend business rates for retail, hospitality and leisure businesses confirms yet again that the business rates system in this country is broken and unaffordable. If we want to build back better as a country, this is the time to look at this system once and for all to make sure that it is reformed so that it is affordable for businesses in future.

Lord Goddard of Stockport Portrait Lord Goddard of Stockport (LD) - Hansard

According to the Institution of Civil Engineers, the construction industry is set to play a key role in restarting the economy and helping the nation recover from the impact of the crisis. If it is to facilitate these efforts, the Government need to help it weather the storm.

Jobs are coming under threat as the UK braces for a global recession due to Covid-19. In a year or so, with workloads significantly down, there will be a need to preserve skills to prevent future skills gaps and shortages in the industry. Socially valuable projects that are labour-intensive—particularly repair, maintenance and improvement work—will provide a stable pipeline of work while keeping people employed and creating a built environment fit for the future.

The noble Lord, Lord Bourne of Aberystwyth, made the point about apprentices. Would the Government consider suspending the apprenticeship levy indefinitely to provide immediate financial relief to construction employers, and implementing an apprenticeship guarantee?

Previously, there has been a tendency for the Government to focus on large-scale engineering projects that garner public attention but do not support large amounts of labour or a stable pipeline of work for the industry. In planning for future construction, would the Government recommend putting forward long-term, socially valuable projects that are labour intensive or keep more people in work? For instance, the energy performance of the UK’s existing housing stock must be improved if we are to achieve our long-term emissions targets.

The enhancement of UK housing stock to improve its energy efficiency would be a socially valuable project that would maintain and sustain employment. This type of work is intensive and equally spread geographically, making it an ideal project for employing the construction sector, supporting regional growth and getting the economy moving. I recognise that this is a complex task, but it would really reduce strain on the labour market and supply.